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OMB delaying budget passback guidance, creating uncertainty

Jason Miller, executive editor, Federal News Radio

Agency officials across the government have not received budget passback documents and likely will not until the White House and Congress agree on deficit reduction steps or both parties give up and let sequestration take place.

An Office of Management and Budget official confirmed in an email to Federal News Radio the administration "has held off on passbacks to agencies to determine if adjustments will be needed based on the current negotiations. No decisions have been made at this point regarding budget timing."

OMB traditionally sends passback, or budget guidance, which includes both actual spending numbers and policy guidance for the current and upcoming fiscal year, right around Thanksgiving. But several long-time senior agency leaders said they can't remember a time when OMB held up the communications this long.

OMB did provide agencies with initial planning guidance in May, but nothing since departments submitted their spending requests to the White House in September.

One former OMB official, who requested anonymity, said in the past the White House would try to give agencies draft guidance in the fall so they would know the administration's thinking and could offer comments before OMB finalized it.

More information sought

The OMB official said they asked agencies for additional information and analysis after September to update the estimates in the Sequestration Transparency Act report. The administration is using the data to finalize calculations of the spending reductions that would be required. The request was of a technical nature. For example, OMB requested the sequestrable federal administrative expenses in otherwise exempt mandatory accounts.

James Capretta, fellow, Ethics and Public Policy Center

"The fact they have a six month continuing resolution has made it difficult to get planning done. The fact they now are still not really clear where they will end up with their 2014 request makes it difficult to plan. The fact they still are not quite sure if they are going to get this 10 percent 2013 across the board cut or not makes it difficult to plan," said Jim Capretta, a former OMB budget official, who now is a fellow at the Ethics and Public Policy Center, a think tank in Washington. "Throw all that together into one year and you really have some really tremendous uncertainty. Shifting everything to the right in terms of the calendar means that some big decisions will have to be made in a very compressed time period."

Capretta's analysis is held by many senior federal officials, especially in the technology community.

For example, federal chief information officers are waiting OMB's guidance to better understand the next steps for technology modernization across government. Last year, OMB laid out the requirement for agencies to move two commodity IT functions to shared services and four other policy-related mandates.

Less time, more pressure

Several CIOs, who spoke only on the condition of anonymity because of the sensitive nature of pre-decisional budget information, said not having the IT passback guidance is increasing pressure on their agencies.

One CIO said the lack of passback guidance is adding to the pressures and uncertainty around 2013. The CIO said agencies are getting stressed about the lack of information and want some answers around the big question of whether the administration will delay the 2014 budget request to Congress.

The CIO said if they do it's a big deal, and if they don't, it's still a big deal too as it shortens the time for negotiations and appeals with OMB.

The OMB official said the White House hasn't made a decision about the timing of the budget.

Another CIO from a major agency said they aren't too concerned about the lack of OMB guidance because they know their 2013 budget is based on the continuing resolution, which is in place until March. And, the CIO said, their agency still holds high expectations for Congress and the White House to come to a final agreement on spending cuts.

A third CIO said they don't think passback will change their plans too much, but the fact that it's so late compresses the timeline in 2013 to move out on initiatives.

Finally, a fourth CIO said the lack of budget guidance and more broadly the fiscal negotiations is causing them to jump through additional hoops and spend a lot of time that could be used better elsewhere.

"Our challenges here are formulated by Congress not getting off their fannies and approving a budget by Oct. 1," the fourth CIO said. "We wouldn't be in any of these situations if they did that. When you add the sequestration, it is a major compounder to this entire problem. We are already under a CR, which is having an impact, and sequestration will cause us to go down a very different path. There will be breakage across our agency to get to the place where we are sailing smoothly. It's a very different trajectory than we are on now."

Even if the White House and Congress come to an agreement in the next two weeks, several CIOs say the compressed timeline will be tough to meet.

CIOs still in the dark

The fourth CIO said when their agency has days instead of weeks to turn around the passback, it's not only inefficient but it has a "Slinky effect" across the agency, where everything gets pushed back.

"It's a macro problem because this is Congress jerking the federal agencies around because of the unintended consequence of not getting their homework done," the CIO said. "One of the things that potentially will hiccup is some of the cyber efforts. It's like people having a big wave come through and trying to see what is left over. All the hot button IT items — cloud, mobile, data center consolidation — are impacted by this inefficient way of doing business."

Dan Tangherlini, acting administrator, GSA

Several CIOs also said OMB didn't provide even a little insight during the CIO Council meeting earlier this month.

The third CIO said they talked about shared services, the potential of IT reform legislation and other administration priorities, but no specifics about OMB's expectations for 2013 and beyond.

Beyond technology, the impact on agencies of the delay in budget guidance and the potential of sequestration is all about resources.

Dan Tangherlini, the acting administrator of the General Services Administration, said at a press conference last week that GSA is most concerned about how sequestration will impact its federal customers.

"Our planning is really responsive to the agencies we serve and try to get a better sense of how they are thinking about it. So one of the things we have been trying to do is establish a continual framework of communication around that for them, and seeing if there are ways we can help them manage their way through it," he said. "Most of GSA's activities are not directly impacted by sequestration, because they are really supported by fees or rent paid by agencies. It's those agencies, that original source of funds, that could be impacted by sequestration."

A glimmer of good news?

Capretta said with all these delays and unknowns because of fiscal negotiations, it's possible the 2014 budget could be even less relevant than usual.

On the other hand, he said agencies may be taking such a cautious approach with their budget planning that they may receive a little good news.

"If it turned out that 2013 was better than [planned for], then they at least would have probably additional resources rather than less going into 2014," Capretta said. "I think the big problem is to assume you will have some money and then not have it, and building a budget around some presumption that resources will be there and then some policy decisions come down that actually lead you not to have the resources. That's when agencies get themselves into an awful lot of trouble."

He added agencies have been planning and reviewing their budgets over the last few months, so they know most cuts likely will come from "lumpy expenditures," such as large programs where contracts could be delayed without harming the service to the citizens.

Capretta said the goal with any sort of budget reduction is not to harm the public so that means the back-office functions and administrative functions likely will take the biggest hits.

But he said no matter what happens with these fiscal negotiations, one thing is very certain.

"On the discretionary side where agencies get their budgets, I don't see any possibility of an increase. The caps already have been imposed under the Budget Control Act of 2010, those are 10 years worth of discretionary spending limitations. I don't see those caps ever going up. I think they are a ceiling," Capretta said. "If there is a budget agreement, in addition to tax and entitlement changes, there's a pretty good chance those caps would get lowered even further, not by a huge amount, but by some additional amount as part of a deficit reduction package."